Fair Use of Trademarks: Anheuser-Busch v Budějovicky Budvar

82 Pages·2016·1.56 MB·English

Fair Use of Trademarks: Anheuser-Busch v Budějovicky Budvar
Kirby Watkins
Dissertation for Master’s Degree
Supervised by Doc. Ing. Tomáš Cahlik
Charles University
Faculty of Social Sciences
International Economics and Political Studies
Prague, Czech Republic
Submitted May 2007
This thesis is an original work. All sources have been properly cited in context and in the
bibliography. On my honor as a student I have neither given nor received aid on this
thesis.
Kirby Watkins
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Table of Contents
1. Introduction...........................................................................................................5
2. The Dispute-From Beginning to Privatization....................................................7
2.1 History of Anheuser-Busch........................................................................7
2.2 History of Budějovicky Budvar................................................................13
2.3 Settlement of the Trademark Dispute.......................................................20
2.4 The Privatization Process for Budějovicky Budvar...............................23
2.5 Potential Gains to Each Party....................................................................27
2.6 Attempted Purchase...................................................................................30
3. Relevant Law for the Trademark Dispute.........................................................40
3.1 Geographical Indications...........................................................................40
3.2 Paris Convention........................................................................................42
3.3 TRIPS..........................................................................................................44
3.4 Results of “Budweiser” Litigation............................................................49
3.5 Nation by Nation........................................................................................50
3.6 World Trade Organization.........................................................................55
4. A Future Without the Dispute?..........................................................................60
4.1 Prospects for Budějovicky Budvar............................................................60
4.2 Anheuser-Busch’s Potential Role.............................................................69
5. Conclusion...........................................................................................................72
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Abstract
This paper examines the trademark dispute between the breweries Anheuser-
Busch of the United States and Budějovicky Budvar of the Czech Republic. Their
dispute has lasted over a century and it has had numerous near-resolutions. This paper
begins with the early histories of each company and continues to the present day (May
2007). It traces the near agreement just after the Velvet Revolution and the sudden
change in character of the negotiations due to the privatization process in the Czech
Republic. The process of the negotiations between Budějovicky Budvar, the
Czechoslovak/Czech government and Anheuser-Busch is examined. Then the relevant
trademark and applicable geographic indication laws are examined as is the litigation in
the 1990s that followed the failed negotiation. Finally, the current privatization proposal
from the Czech government is investigated as well as the potential roles for both
Budějovicky Budvar and Anheuser-Busch.
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I. Introduction
The Czech brewery Budějovicky Budvar (Czech Budvar) is in a unique position
in the world economy. During the two rounds of privatization carried out by the Czech
government in the early 1990s, the brewery was the subject of intense interest and
controversy. This interest emanated from a few sources. The chief proponents of the
controversy which built up around the brewery were the British consumer group the
Campaign for Real Ale (CAMRA), the American corporation Anheuser-Busch and the
Czech public.
The Czech public was concerned that if Budějovicky Budvar was privatized it
would be purchased by a foreign company. This foreign company would then either
lower the standards of quality of the beer produced by Budějovicky Budvar or it would
undertake serious and extensive cutbacks. Neither of these was acceptable to a public
that regarded Czech Budvar as a distinct source of national pride. So, Budějovicky
Budvar was not privatized.
This was much to the chagrin of Anheuser-Busch. Anheuser-Busch and Czech
Budvar have been engaged in a long dispute. This dispute centers on the right of each
brewer to sell beer under the brand name “Budweiser”. Anheuser-Busch has sold
Budweiser beer in the United States since the late 19th Century. Czech Budweiser is
produced in the town Ceske Budejovice which translates in German to Budweiser, by
Budějovicky Budvar. The beer produced in this town has long been known as Budweiser
beer.
In addition, the Czech people are intensely interested in their beer. The bond
between a Czech person and their favorite beer is very strong. The pride that the Czechs
take in their beer, widely admired as the best in the world, is deep. It was one of the few
things the Czechs were allowed to engage in with little restriction during the communist
period. Even today, minor changes in the status of beer and breweries in the Czech
Republic can be a cause of great upset.
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So, with these things in mind, this paper will examine the trademark dispute
between Anheuser-Busch and Budějovicky Budvar. First, the histories of both
companies will be briefly related. Then, the privatization process and the attempts to
privatize Budějovicky Budvar by the Czechoslovakian/Czech governments will be
investigated. The primary players and problems will be identified and illuminated.
Since Budějovicky Budvar was not privatized the next necessary step in this
project is to understand the laws that affect the dispute so that an understanding of the
evolution of this problem can be realized. During the 1990s, the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS) came into existence and it
replaced much of the previous international system with regards to property rights.
Geographical indications and their treatment under TRIPS will be thoroughly examined,
especially in their relationship to trademarks. This is because much of the Czech
government’s and Budějovicky Budvar’s arguments regarding the rights to the Budweiser
name center on the belief that Budweiser beer can only truly be produced in České
Budějovice. This is in direct contrast to Anheuser-Busch’s belief that the same beer can
be produced anywhere in the world, which is important for its expansion strategy in the
international beer market.
Finally, Budějovicky Budvar’s prospects for the future will be examined. In early
2007, the current Czech government announced its intention to turn Budějovicky Budvar
into a joint stock company in preparation for privatizing it. But how many issues that
prevented Budějovicky Budvar from being privatized in the early 1990s have been
solved? What new ones have been created? Since Anheuser-Busch gained a distinct
advantage in the legal arena after the adoption of TRIPS, will it still have interest in a
potential alliance or partnership with Budějovicky Budvar? This paper will argue that
despite the weak position of the Czech government and Budějovicky Budvar’s slackening
grip on the rights to the Budweiser trademark, Anheuser-Busch still has a definite and
pronounced interest in Budějovicky Budvar.
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II. The Dispute-From Beginning to Privatization
History of Anheuser-Busch
Eberhard Anheuser was a successful merchant in St. Louis, Missouri in the mid-
1800s.1 His company manufactured and sold soap and candles. In 1859 ‘The Bavarian
Brewery’, a local brewery that Anheuser frequented, was struggling to pay its bills.
Anheuser feared that he might lose one of his favorite local beverages so he made a loan
to help the brewery.2
Unfortunately, the brewery continued to have difficulty and in 1860 Anheuser and
a partner, William O’Dench, bought out the minority stakeholders and creditors. This
prevented the brewery from declaring bankruptcy but did not solve the brewery’s
inherent problems. In an attempt to make a clean break with the past difficulties the
company was briefly closed, reorganized and then renamed E. Anheuser Brewing and
Co. Brewing was restarted following the reorganization.
At the same time that Anheuser was investing in a brewing venture in St. Louis,
Adolphus Busch immigrated to that city from Germany. Busch was the second youngest
of twenty-two children and three of his brothers had already set up residence in St. Louis.
His brother John had started the John B. Busch Brewing Company and invited Adolphus
to join him as a partner, but Adolphus declined. Instead, he began a business distributing
brewing supplies.
While selling his wares, Adolphus visited E. Anheuser Brewing and Co and it was
here that he met Lily Anheuser. Adolphus asked Eberhard Anheuser for permission to
begin courting Eberhard’s daughter. Eberhard granted his permission, and in 1861
Adolphus and Lily were married. Four years later, Adolphus merged his company with
Anheuser’s and the two men became equal partners.
1 Did You Know? “Anheuser and Busch.” http://www.didyouknow.cd/anheuser.htm. Visited 24 March
2007
2 Did You Know? “Anheuser and Busch.”
3 Did You Know? “Anheuser and Busch.”
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In 1876 E. Anheuser Co.’s Brewing Association began brewing a lager inspired
by the brews produced in Bohemia.4 Adolphus Busch said in court that “the idea was
simply to brew similar in quality, colour, flavour and taste to beer then made at Budweis,
or in Bohemia. ... The Budweiser beer is brewed according to the Budweiser Bohemian
process”.5 In other words directly copying the brews made in Bohemia. Adolphus Busch
also decided to name the beer after the town of Budweis as a marketing ploy to improve
sales.6 Although E. Anheuser Co.’s Brewing Association made the beer, a company
owned by Busch’s friend Carl Conrad bottled and distributed it. Conrad registered the
name Budweiser in 1878.7
One year following Conrad’s trademark of “Budweiser”, Eberhard Anheuser fell
ill and E. Anheuser Co.’s Brewing Association was renamed Anheuser-Busch Brewing
Association. Adolphus was appointed president the next year and in 1883, Anheuser-
Busch Brewing Association acquired the rights to the name “Budweiser”.8 The company
proceeded to aggressively promote its brew.
Although Anheuser-Busch Brewing Association had a strong market position
with the name “Budweiser” in the US, it was not the only company to sell a brew with
that name. Indeed, brews made in the Bohemian style were popular in the US and several
companies had adopted the name “Budweiser” or a derivative thereof.9 Two other
popular brewers of the time, Miller and Schlitz, both produced Budweisers.10 However,
with Anheuser-Busch Brewing Association promoting its beer with increasing
4 Karel Janicek,” Beer Makers Continue Fight Over “Bud” Trademark Dispute Goes Back to 1906”,
Charleston Daily Mail, Jan. 19, 2004, p. 3D.
5 Bernard O’Connor, “Legal Developments in the International Protection of Geographical Indications” p7,
available at www.oconnor.be.
6 Robert Anderson, “Pressure Mounts in Battle of the Budweiser Brands: End of Century-Old Dispute
Between Czech and U.S. Breweries May Be Near”, Financial Times, Dec. 2, 2003, p 24.
7 Peter V.K. Reid, “That Other Budweiser”, Modern Brewery Age,(2004): pi 6.
8 Reid (2004)pl6
9 Did You Know? “Anheuser and Busch.”
10 Reid (2004)pl6
assertiveness, many companies stopped using the name.11 But not all companies ceased
to use the term.
During the late nineteenth and early twentieth centuries, Anheuser-Busch began
to defend its popular mark against other companies’ appropriation of the name. The court
case Anheuser-Busch Brewing Association v. Frederick Miller Brewing Co.,12 saw
Anheuser-Busch challenge the Fred Miller Brewing Co.’s use of Budweiser. The
defendant contended that Budweiser as a term merely designated the use of a specific
brewing process and thus could be used by anyone.13 In its decision, the court opposed
that claim, stating that Anheuser-Busch had introduced and validly registered the term in
the United States.14 The court also concluded that Anheuser-Busch made a unique beer
that had managed to become so popular that Adolphus Busch, the president of Anheuser-
Busch, was identified as “Mr. Budweiser.”15
Anheuser-Busch encountered problems in 1905 when it attempted to re-register
the trademark “Budweiser” in the United States.16 Its application was rejected, and again
it was rejected in 1906 because the Patent Office reasoned that the term “Budweiser” was
a term of geographic origin, meaning “from Budweis”.17 However, the next year the
Patent Office granted Anheuser-Busch’s trademark application for “Budweiser”.18
Once in possession of the trademark, Anheuser-Busch proceeded to secure its
rights against any use that was even slightly similar. In the case Anheuser-Busch v.
Cohen in 1930, the court granted protection for Budweiser malt syrup19. The US courts
even extended protection for Anheuser-Busch to the word “Bud” in a 1939 decision.20
11 “Anheuser-Busch Companies Inc-Company History.” http://www.fiindinguniverse.com/company-
histories/AnheuserBusch-Companies-Inc-Company-History.html. Visited 24 March 2007.
I2Anheuser-Busch Brewing Association v. Frederick Miller Brewing Co. F. 864, 865 (E.D. Wis. 1898).
13 Anheuser-Busch Brewing Association v. Frederick Miller Brewing Co.
14 Anheuser-Busch Brewing Association v. Frederick Miller Brewing Co.
15 Anheuser-Busch Brewing Association v. Frederick Miller Brewing Co.
16 O’Connor p8
17 O’Connor p8
18 O’Connor p8
19 Anheuser-Busch, Inc. v. Cohen, 37 F.2d 393, 397 (D. Md. 1930)
20 Anheuser-Busch, Inc. v. Power City Brewery, Inc., 28 F. Supp. 740, 743 (W.D.N.Y. 1939)
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According to the decision, people had come to associate the term “Bud” with the
Budweiser brand beer produced by Anheuser Busch.21
Although Anheuser-Busch was very successful in defending its trademark, it did
not win every single court case. Anheuser-Busch contested DuBois Brewing Co.’s use of
the Budweiser name in 1949, but the court denied Anheuser-Busch’s challenge.22
Stating that, between 1909 and 1940 the DuBois Brewing Co. used the name Budweiser
without Anheuser-Busch condemning it23, the court concluded “Anheuser has permitted
DuBois to conduct a localized operation over so long a period of time that it would be
inequitable to compel DuBois to surrender use of the name at this time.”24 However, the
court also warned that DuBois’s rights to Budweiser were limited to its location of
DuBois, Pennsylvania.25 “By the same token, DuBois, having confined the sale of its
DuBois Budweiser product to localized territory, should not expect to extend its use of
that name to other areas with legal impunity.”26 DuBois Brewing Company continued to
use Budweiser until it was purchased by Pittsburgh Brewing Co. in 1972.27
Meanwhile, Anheuser-Busch’s expansion continued apace. By 1901 its annual
production reached one million barrels and it became the number one brewer in the US.28
In 1913 Anheuser-Busch patented a diesel engine and began to diversify into ice cream,
com syrup and refrigerated cars for trains.29 This diversification would prove important
in 1918 when Prohibition laws were instituted in the US and alcohol was made illegal.
The company was able to stay afloat owing to its diversity and even managed to grow
during the period when its formerly premier product was illicit.
21 Anheuser-Busch, Inc. v. Power City Brewery, Inc., 28 F. Supp. 740, 743 (W.D.N.Y. 1939)
99
Anheuser-Busch, Inc. v. Du Bois Brewing Co 175 F.2d 370 (3d Cir. 1949), cert, denied, 339 U.S. 934
(1951).
23 Anheuser-Busch, Inc. v. Du Bois Brewing Co.
24 Anheuser-Busch, Inc. v. Du Bois Brewing Co
25 Anheuser-Busch, Inc. v. Du Bois Brewing Co
26 Anheuser-Busch, Inc. v. Du Bois Brewing Co
27 Reid (2004) p 16.
28 Anheuser-Busch Inc. “Our History.” http://www.anheuser-busch.com/our_company/history.html. 15
March 2007.
29
Anheuser-Busch Inc “Our History”.
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